KUALA LUMPUR (Jan 8): Affin Hwang Capital Research has maintained its “buy” rating on Jaya Tiasa Holdings Bhd with an unchanged target price (TP) at RM1.32, and said the company’s valuation is seen to be attractive based on its 9.6 times FY21E earnings per share (EPS).

In a note today, Affin Hwang analysts Nadia Aquidah said she expects strong earnings recovery in FY21E to grow by more than 200% year-on-year (y-o-y) due to stronger crude palm oil (CPO) prices, while FY22E earnings could potentially decline y-o-y due to lower CPO average selling price (ASP) forecast but partially offset by higher production.

“The resumption of construction works with the easing of lockdowns and restrictive movement control orders since mid-2020 has helped to improve demand for timber products as well as prices,” she said.

Nadia said that there is no change to its CPO assumption for Jaya Tiasa at RM2,700 to RM2,500 per metric ton (MT) in FY21-22E, from RM2,054 per MT for FY20 CPO ASP.

“We have seen a V-shaped recovery in CPO prices in 2020 and we believe the price will remain supported going into the first half of 2021 (1H21), underpinned by tight stock levels, concerns about CPO production given the weather uncertainties and strong prices of other edible oils. 

“Looking at the second half of 2021 (2H21), we believe prices could potentially be under pressure as production picks up,” she said.

At 10.30am today, Jaya Tiasa share price fell one sen or 1.13% at 88 sen, valuing the company at RM847.13 million.